A growing body of research has examined the relationship between episodic memory decline, the cognitive hallmark of Alzheimer's disease (AD), and the presence of Apolipoprotein E ε4 (APOE ε4) allele, a major genetic risk factor for the disease. Our review attempts to summarize and critically evaluate this literature. We performed a systematic search for studies assessing episodic memory in AD patients who were genotyped for APOE ε4 and identified fourteen papers. Although most of these papers reported significant relationships between APOE ε4 and episodic memory decline in AD, some papers did not confirm this relationship. Our review links this controversy to the conflicting literature about the effects of APOE ε4 on general cognitive functioning in AD. We identify several shortcoming and limitations of the research on the relationship between APOE ε4 and episodic memory in AD, such as small sample sizes, non-representative populations, lack of comparison of early-onset vs. late-onset disease, and lack of comparison among different genotypes that include APOE ε4 (i.e., zero, one, or two ε4 alleles). Another major shortcoming of the reviewed literature was the lack of comprehensive evaluation of episodic memory decline, since episodic memory was solely evaluated with regard to encoding and retrieval, omitting evaluation of core episodic features that decline in AD, such as context recall (e.g., how, where, and when an episodic event has occurred) and subjective experience of remembering (e.g., reliving, emotion and feeling during episodic recollection). Future research taking these limitations into consideration could illuminate the nature of the relationship between APOE ε4 and episodic memory decline in AD.